I call this my PLAYSCHOOL strategy, because there is a bear in there...
Taking a complete punt on the ASX and US stocks continuing a bit of a downward run for a while so have taken a position on these ETFs that are a way of shorting the ASX and US markets without the complications. These work just like buying and selling normal shares.
From a user post on HotCopper
"BBOZ and BEAR are actually relatively simple strategies but as described above need to be carefully monitored as they do the opposite of what most investments do (i.e. they are specifically designed to go up when the market goes down). In order to achieve their investment strategies they essentially short SPI (ASX 200) futures, in the case of BEAR this is done on close to a 1:1 basis, in the case of BBOZ, this is done on a 2-3:1 basis.
I have used both funds extensively in my trading strategies to both hedge against or profit from market downturns. BBOZ requires far more careful monitoring due the leverage involved than BEAR but both do what they say. The BetaShares website shows you on a daily basis the "exposure" you should be expecting on the day vs. the ASX 200. e.g. at the time I write this BEAR is providing a -1.02x performance and BBOZ is providing a -2.17x exposure.
FYI, there is a similar product to BBOZ available for the US market, its called BBUS"
BEAR - BetaShares Australian Equities Bear Hedge Fund provides investors with a simple way to profit from, or protect against, a declining Australian sharemarket. It seeks to generate returns that are negatively correlated to the returns of the Australian sharemarket (as measured by the S&P/ASX 200 Accumulation index).
BBOZ - BetaShares Australian Equities Strong Bear Hedge Fund provides investors with a simple way to profit from, or protect against, a declining Australian sharemarket. It seeks to generate magnified returns that are negatively correlated to the returns of the Australian sharemarket (as measured by the S&P/ASX 200 Accumulation Index).
BBUS - BetaShares U.S. Equities Strong Bear Hedge Fund - Currency Hedged provides investors with a simple way to profit from, or protect against, a declining U.S sharemarket. It seeks to generate magnified returns that are negatively correlated to the returns of the U.S sharemarket (as measured by the S&P 500 Total Return Index).
Which one of the two has better potential? I found downside of BBUS is SPX future bounce back during Australian open? Any thoughts?
zAngus
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@stockmarketupdate, heya. Didnt really understand your question sorry, but the info is probably in the description above. BBOZ is leveraged 3:1, BEAR is 1:1 for whatever the market does.
stockmarketupdate
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@Angusmck, Thanks for your reply. I meant to ask about performance of BBOZ vs BBUS. Basically which one of the two shorts (BBUS /SPX) or (BBOZ / ASX) have better upside based on your longer experience of tracking the two stocks
zAngus
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@stockmarketupdate, easiest way is to just look at the charts and / or see their 12 month performance or perhaps look at their 3 month performance if you like to see what is happening more recently.
stockmarketupdate
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@Angusmck, Thanks. I've done that and based on my observation, BBOZ performs better because of linkage to ASX. BBUS has higher potential but SPX future most of the time recovers from the loss of previous night